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JOINT CIRCULAR

Providing guidance on guaranty for laborers going to work abroad

Pursuant to the June 14, 2005 Civil Code;

Pursuant to the Government's Decree No. 141/2005/ND-CP of November 11, 2005, on management of Vietnamese laborers working abroad;

Pursuant to the Government's Decree No. 29/2003/ND-CP of March 31, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Labor, War Invalids and Social Affairs;

Pursuant to the Government's Decree No. 62/2003/ND-CP of June 6, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Justice,

In order to ensure uniform guaranty for laborers going to work abroad, the Ministry of Labor, War Invalids and Social Affairs and the Ministry of Justice hereby jointly guide guaranty for laborers going to work abroad as follows:

I. GENERAL ISSUES

1. Guaranty for laborers going to work abroad

a/ Guaranty for laborers going to work abroad means an act whereby a third person (hereinafter referred to as the guarantor) gives an enterprise sending laborers to work abroad (hereinafter referred to as the guarantee) an undertaking to perform obligations on behalf of laborers going to work abroad (hereinafter referred to as the guaranteed) when the guaranteed fails to perform or improperly or incompletely performs his/her obligations falling due towards the guarantee. The parties may also agree that the guarantor shall perform obligations only when the guaranteed is incapable of performing his/her obligations.

b/ The guarantee may request the guaranteed to recommend a guarantor who meets all the conditions specified in Clause 1, Article 16 of the Government's Decree No. 141/2005/ND-CP of November 11, 2005, on management of Vietnamese laborers working abroad, and is accepted by the guarantee for signing a guaranty contract.

2. Scope of guaranty:

The guarantor shall reach agreement with the guarantee on the provision of guaranty for part or the whole of the following obligations:

a/ To pay service charges which the guaranteed fails to pay, if any;

b/ To pay compensations for damage caused to foreign partners and other damage caused by breach of contract on the part of the guaranteed;

c/ To pay fines for breach of contract, if so agreed upon in the overseas working contract;

d/ To pay interests on guaranteed amounts which are paid lately. These interests shall be calculated at the basic interest rate announced by the State Bank at the time of payment for the late payment duration, unless otherwise agreed by the parties or provided for by law;

e/ Other obligations of the guaranteed as agreed upon by the parties which are neither prohibited by law nor contrary to social ethics.

The scope of guaranty shall cover all obligations of the guaranteed, unless otherwise agreed upon by the parties or provided for by law.

3. Time limit for performance of guaranty obligations

The time limit for performance of guaranty obligations shall be agreed upon by the guarantor and the guarantee; if the two parties have no agreement thereon, the guarantor shall perform guaranty obligations within a reasonable time limit set by the guarantee, counting from the time the guarantor receives the guarantee's notice on the performance of obligations on behalf of the guaranteed.

4. Form and contents of guaranty contracts

a/ Guaranty contracts shall be made in writing.

b/ Guaranty contracts shall be made by involved parties, covering the following principal contents: scope of guaranty; rights and obligations of contractual parties; time limit for performance of guaranty obligations; and settlement of guaranty.

5. Application of measures to secure the performance of guaranty obligations

a/ The guarantee may agree with the guarantor on the application of such measures as pledge of property, mortgage of property or deposit so as to secure the performance of guaranty obligations.

b/ The pledge, mortgage and deposit shall be made in writing, either in a separate document or incorporated in the guaranty contract.

c/ The establishment and application of the measure of pledge of property, mortgage of property or deposit to secure the performance of guaranty obligations shall comply with the provisions of the Civil Code and relevant legal documents.

II. RIGHTS AND OBLIGATIONS OF PARTIES TO GUARANTY CONTRACTS

1. Rights of the guarantor

a/ To be fully informed by involved parties of the rights and obligations of the guaranteed towards the guarantee.

b/ To agree to provide guaranty for part or the whole of obligations to be performed by the guaranteed towards the guarantee according to the provisions of Clause 2, Section I of this Circular.

c/ To request the guarantee to notify the workplace, working situation, incomes, health, and working and living conditions of the guaranteed.

d/ To request the guarantee to apply necessary measures and create favorable conditions for the guaranteed to properly perform the contract signed with foreign partners.

e/ To receive back papers and documents proving his/her financial capacity, capability and prestige which have been handed over to the guarantee upon signing of the guaranty contract, unless otherwise agreed by the parties on the time of returning the aforesaid papers and documents.

f/ After the guaranty contract terminates, the guarantee prioritizes the recruitment of the guarantor and his/her family members to work abroad.

g/ In case where the guarantee improperly or incompletely performs obligations stated at Points a, b, c and d, Clause 4 of this Section, thus causing damage to the guarantor, the guarantor shall have the right to claim damages and offset such damages against his/her obligations towards the guarantee.

h/ When the guarantor has fulfilled guaranty obligations, he/she may request the guaranteed to perform the latter's obligations towards the guarantor within the scope of guaranty, unless otherwise agreed upon.

i/ Other rights, if so provided for by law or agreed upon by the parties.

2. Obligations of the guarantor:

a/ To hand over papers and documents proving his/her financial capacity, capability and prestige and other necessary documents to the guarantee for verification and consideration before signing the guaranty contract, if so agreed upon.

b/ To urge and educate the guaranteed and his/her family to perform obligations under the contract signed with the guarantee; and together with the guaranteed's family, to apply necessary measures to mitigate damage caused by breach of contract on the part of the guaranteed.

c/ To perform obligations on behalf the guaranteed within the committed scope.

d/ To transfer his/her property to the guarantee or to a third person as agreed upon for disposal in case of failure to perform or improper or incomplete performance of guaranty obligations.

e/ Other obligations, if so provided for by law or agreed upon by the parties.

3. Rights of the guarantee

a/ To request the guarantor to prove his/her financial capacity, capability and prestige and hand over relevant papers and documents, if any, for verification and consideration.

b/ To request the guarantor to transfer his/her property for disposal in case where upon the expiration of the time limit for performance of guaranty obligations, the guarantor still fails to perform or incompletely performs guaranty obligations. If the guarantor refuses to transfer his/her property for disposal, the guarantee may initiate a lawsuit at a competent court.

c/ Other rights, if so provided for by law or agreed upon by the parties.

4. Obligations of the guarantee

a/ To fully inform the guarantor of the guaranteed's rights and obligations toward the guarantee;

b/ To notify the guarantor of the guaranteed's workplace, working situation, incomes, health, working and living conditions.

c/ To collaborate with partners, employers and related parties in applying necessary measures and creating favorable conditions for the guaranteed to properly perform the signed contracts.

d/ To preserve papers and documents proving the guarantor's financial capacity, capability and prestige. If causing damage to or loss of such papers and documents, to pay damages therefor.

e/ When the guaranteed breaches the overseas working contract, the guarantee shall immediately notify in writing the guarantor and the guaranteed's family thereof for the latter to urge and educate the guaranteed to properly perform the contract and remedy damage caused by the guaranteed.

f/ To notify the guarantor of the performance of obligations on behalf of the guaranteed.

g/ To supply the guarantor with papers and documents proving the damage caused by the guaranteed.

h/ To return to the guarantor papers and documents proving the guarantor's financial capacity, capability and prestige, if any, which were supplied upon signing of the guaranty contract, unless otherwise agreed by the parties on the time of returning the aforesaid papers and documents.

i/ To prioritize the recruitment of the guarantor and his/her family members to work abroad after the guaranty contract terminates.

j/ Other obligations, if so provided for by law or agreed upon by the parties.

5. Rights and obligations of parties in case of application of measures to secure the performance of guaranty obligations

In case where the parties to a guaranty contract agree upon on the application of measures to secure the performance of guaranty obligations as specified in Clause 5, Section I of this Circular, the guarantee shall have the rights and obligations of the pledgee, mortgagee or depositary and the guarantor shall have the rights and obligations of the pledgor, mortgagor or depositor under the pledge, mortgage or deposit contract signed between the parties serving as a security measure.

III. OBLIGATIONS OF THE GUARANTEED

1. To recommend a guarantor to the guarantee for signing the guaranty contract.

2. To sign the guaranty contract, if so requested by the guarantor and the guarantee.

3. To perform his/her obligations towards the guarantor within the scope of guaranty when the guarantor has fulfilled obligations for him/her, unless otherwise agreed upon.

4. Other obligations, if so provided for by law or agreed upon by involved parties.

IV. TERMINATION AND LIQUIDATION OF GUARANTY CONTRACTS

1. A guaranty contract shall terminate when:

a/ The guaranteed has fulfilled his/her obligations towards the guarantee.

b/ The guarantor has fulfilled guaranty obligations.

c/ The guaranty is cancelled or replaced by other security measures.

d/ It is so agreed upon by the parties.

e/ Other cases provided for by law.

2. Liquidation of a guaranty contract

a/ The time limit for liquidation of a guaranty contract shall be 30 days, counting from its termination, unless otherwise agreed by the parties.

b/ The liquidation of a guaranty contract shall be made in writing, clearly stating the degree of performance of the agreements reached in the guaranty contract and the parties’ responsibilities, if any, arising from the liquidation of the contract.

In case of termination of the guaranty under the provisions of Points c and d, Clause 1 of this Decision, the liquidation of the guaranty contract may be made in a separate document or incorporated in the document on cancellation or replacement of the guaranty or in the written agreement on guaranty termination.

V. SETTLEMENT OF GUARANTY

1. The guarantor shall perform guaranty obligations if, upon the expiration of the time limit for performance of guaranty obligations, the guaranteed fails to perform, improperly or incompletely performs the obligations. The guarantor shall also perform guaranty obligations if, upon the expiration of the time limit for performance of guaranty obligations, the guaranteed is incapable of performing his/her obligations towards the guarantee, if so agreed upon by the parties.

2. If upon the expiration of the time limit for performance of obligations the guarantor still fails to perform, improperly or incompletely performs guaranty obligations, and refuses to transfer his/her property for disposal as agreed upon, the guarantee shall have the right to initiate a lawsuit at the court or request another competent state agency to dispose of the property of the guarantor.

If the performance of guaranty obligations is secured by pledge, mortgage or deposit under the provisions of Clause 5, Section I of this Circular, the guarantee may dispose of the security property according to the pledge, mortgage or deposit contract already signed by the parties.

3. The proceeds from the disposal of the guarantor's property, after subtracting preservation and other necessary expenses related to the disposal of such property, shall be paid for guaranty obligations. If, apart from guaranty obligations, there are other obligations also secured with the guarantor's property, the order of payment priority shall be determined in accordance with the provisions of law.

The guarantee shall return the amount left after payment of guaranty obligations to the guarantor. In case where the proceeds from the sale of property are not enough to make payment to the guarantee, the guarantor shall add other property which shall be disposed for payment of the deficient amount.

4. The parties shall have the right to request a competent court to settle any arising disputes according to the provisions of law.

VI. STATUTE OF LIMITATIONS FOR INITIATING LAWSUITS OVER GUARANTY CONTRACTS

The statute of limitations for initiating a lawsuit to request the court to settle disputes over a guaranty contract is two years, counting from the date when legitimate rights and interests of individuals, legal persons and other subjects are infringed upon.

VII. ORGANIZATION OF IMPLEMENTATION

1. This Circular takes effect 15 days after its publication in "CONG BAO."

2. Individuals and organizations should report any problems arising in the course of implementation to the Ministry of Labor, War Invalids and Social Affairs and the Ministry of Justice for consideration and settlement.